Bonum Certa Men Certa

GNU/Linux-Savvy Writers View Elliot Associates as Bad Neighbourhood

Vulture



Summary: People who care about GNU/Linux at Novell are not exactly overlooking the reality of Singer's "vulture fund"

WE have found some analyses that seem to agree with what we wrote earlier today about the bid for Novell [1, 2, 3]. Here is a prominent OpenSUSE user calling Elliott a "Vulture Fund" over in IDG:

The stock market reaction to the offer was predictable: Novell's stock surged 27 percent right after the news broke, and it should stay strong for a while until the market figures out if this is a Good Thing.

The Linux community hasn't raised a big fuss, though I suspect they're still absorbing the news. I know I am, for my part. In particular, I am wondering what will happen to Novell if they accept this unsolicited bid?


Here is what SJVN wrote in IDG:

Some people in the know, like Canonical's COO Matt Asay think this deal could work for SUSE. In his view, Elliot would do well to sell off Novell's Linux division.

I wish I could agree with him, but I looked at Elliot Associates' past history of taking "an activist approach to investing, frequently amassing significant but minority stakes in distressed or under performing companies and attempting to foment change," and I don't like what I see.

Elliot Associates is best known as a 'vulture fund.' They don't make investments to turn companies around. They make investments to crush the cash out of them and then leave the picked over bones for someone else to pick up.


Andy Updegrove, a lawyer, calls it a "Game of Cat and Mouse".

I haven't seen any article yet, though, that describes in detail how the high stakes game of tender offers is played, and how the usual process maps (and doesn't) to a high tech company like Novell. So I thought I'd provide an overview for those that haven't had occasion to follow a tender offer in the past, and also my thoughts on what may happen over the next several months in this particular game of cat and mouse.

So here goes.

The tender offer game: First up, let's talk about how the standard drama plays out. It starts with the acquiror trying to pick up as much stock as possible on the sly before it comes out of the closet. That's because once word gets out that the company (referred to as the “target”) is "in play," the stock will go up. So the acquiror wants to build as big as stake as possible at the cheapest price it can.

But the securities regulators have long realized that this presents two problems: first, the sellers will feel cheated if they later find out they sold at a steep discount to what others get a short while later, and second, the acquiror will vote all the shares it picks up in favor of the acquisition. So the Securities and Exchange Commission (SEC) requires any company that acquires more than 5% of the stock in a public company to make a public filing disclosing that ownership and its intentions.

That filing is made on form 14D, and it must be regularly updated as the acquiror's ownership percentage changes, and as its intentions change. When an acquiror files a 14D, it could affirmatively state that it has no intentions of making a tender offer. Depending on the acquiror, that statement might be credible, or it might be viewed with suspicion. But if it affirmatively states that it intends to make a tender offer, or is keeping its options open, then the word spreads - fast.


Novell's stock may be rising (the valuation of Novell's assets is discussed at IDG), but that's not the point. As Chips B. Malroy explains, "If Singer acquires Novell for 1.8 billion, the causal bid, and Novell has 991 million is cash, Singer is only paying 809 million actually. Singer has lowballed the bid, in hope another company will come in and bid more, so that drives up the price of the 8.5% that Elliot already has, profit, short term, mission accomplished. But if that doesn't happen, and Novell will surely reject the bid, wait for some minor setback in the SCO case, or the next quarterly results from Novell, something bad, and then, true to form, Elliot will reoffer at a lower bid. That is Singer's modus operandi. By doing this, he causes the stock to tank, so he can buy more cheaply."

“Singer has lowballed the bid, in hope another company will come in and bid more, so that drives up the price of the 8.5% that Elliot already has, profit, short term, mission accomplished.”
      --Chips B. Malroy
We have already learned that lesson from Carl Icahn. Malroy comments further on "what Singer will do to Novell, should [he] buy it. He will get rid of almost all top management, and most of middle management. Stop all R&R mostly. Stop and or sell any parts of the company not profitable (and transfer the 991 million to Elliot first)."

Perhaps the only positive side is that Mono junk like Banshee can suffer from a takeover of Novell. As we pointed out last week, Novell no longer contributes much to Linux anyway.

Recent Techrights' Posts

Microsoft XBox is Dying as More Retailers Stop Stocking It and Massive Layoffs Planned Again
Microsoft is circling down the drain
Linux and the Freedom Paradox
Linux is losing freedom if some external actors who only use Microsoft tools for development wrest control
 
Non-Denying Denial From Microsoft (Again) Regarding the End of XBox Consoles
It's kind of hilarious that even the site chosen by Microsoft to relay its BS, based on past loyalty, isn't quite buying it
Bringing Back Lost Articles From the 1990s: Microsoft Products Leave Door Open to NSA
Nothing has changed since then
When the Slop Bubble Pops People Will Say Richard Stallman Was Right (Again)
What was once known as Computer Science turned into "IT"
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Sunday, October 05, 2025
IRC logs for Sunday, October 05, 2025
Links 06/10/2025: Science, Hardware, and Andrej Babis Making a Comeback
Links for the day
Links 05/10/2025: Slow News Day and Wondering About the Canada Post Walkout
Links for the day
Gemini Links 05/10/2025: Telnet Debugging and The Programmer’s Brain
Links for the day
More Than "Just a Rumour": XBox Seems to Have Just Died
At this point, why would any studio out there target or partner with XBox?
How to Tell Your Community, Project or Company is Being Infiltrated by Saboteurs
How to identify nefarious social engineering
The Fortieth Birthday of the FSF Made Us Extremely Happy
It feels like the 'hacker community' is regrouping to discuss things and prepare for the next Big Challenge
Chat Control 2 Them, Not 2 U
Follow the advice of Dr. Patrick Breyer
Mozilla: Throw Away Your "Old" PC and Enable "Digital Rights Management (DRM)"
This is heading in a bad direction
Controlling Our Computing for Another Forty Years
40 years of freedom
Motivational Small Place to Run Large Sites
We deem this scenery motivational and inspiring
Techrights' Text Version (Daily Bulletin) Turns Five This Month
our plain-text bulletins are turning 5 this month
We'll Continue Covering the Moribund OSI and Other Dysfunctional if Not Hostile Institutions
Stefano Maffulli's departure is due to his defection and due to him failing the mission in pursuit of money (his salary)
Links 05/10/2025: Lufthansa Layoffs (4,000) and More Spotify Woes (Aside From Massive Debt)
Links for the day
The Free Software Foundation's Livestream Has Ended, Video/s Might be Online Next
I've asked whether they'll upload video of some of the event; I still wait for an answer
The Register MS Does Not Know the Difference Between Microsoft GitHub and GitLab
At the time of writing (October 5) the article from "Thu 2 Oct 2025" remains uncorrected
"Bullshit Generators" (What RMS Calls LLMs) and Fake Images Already Target the FSF
Why does Google News promote fake articles about the FSF while omitting all the real ones?
Software Patents as a Bubble
Don't invest resources in hype; if you detect a bubble, run away from it
Links 05/10/2025: Political Leftovers, Climate Change, and Security Incidents
Links for the day
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Saturday, October 04, 2025
IRC logs for Saturday, October 04, 2025
Watch the FSF Party Live (via Livestream)
It's in WebM format, which is widely supported by now
Advocacy of Software Freedom Changed, LUGs Became Less Relevant
The way we see it, support groups like LUGs sort of outlived their usefulness when it became easier to install GNU/Linux
For the Second Time in a Few Weeks Microsoft Lunduke Makes False Accusations Against Senior Red Hat Staff to Incite a Despicable 'Troll Army'
Nothing that Microsoft Lunduke claims or says can be trusted
When Microsoft "Integrates" Something With "AI" It Means It's Losing Money and Is Generally Hopeless
how did Bing fare after 36 months of LLM slop being hyped up as "replacement" for search?
Most Certificates Don't Improve Security, They Mostly Increase Downtime (for No Good Reason)
The 'Gemini sites' (capsules) are a growing force
The statCounter Site Has Data Integrity Problems
Maybe we'll get back to statCounter when its data becomes more "stable" again
10 Ways to Combat Software Patents
software patents are loathed also by proprietary software developers
"Just a Little Bit of Meat..."
Free software "absolutism" is not a radical stance, more so if the only "radical" belief the user possesses is that he or she must be in control of his or her software, and by extension his or her computer
Compromised by NVIDIA Proprietary Library
Meanwhile in Boston there are "[r]oundtable talk with FSF volunteers (both in-person and online)"
Red Hat is Ignoring the Free Software Community, It's a "Fortune 1000" Vendor
Red Hat's blog also participates a lot in promoting of Wall Street's latest pump-and-dump "AI" scheme
Free Software Foundation Party Has Begun
We shall be focusing a lot on software patents today
Former Head of the Federal Trade Commission (FTC) Lina Khan Knows Whatever Microsoft Touches Will Die
Just like Skype (as recently as months ago) [...] When Microsoft grabs things, or when it buys things, it almost never ends well
Slopwatch: Fake Articles About LibreOffice in Austria and Wine 10.16
very short
Links 04/10/2025: "attempted Coup" Noted in Facebook, Russia Kills Journalists via Drones
Links for the day
Gemini Links 04/10/2025: Anesthesia and Baudpunk
Links for the day
How Software Patents Were Viewed or Their General Status Changed Over Time
A rough summary
Links 04/10/2025: "Privacy Harm Is Harm", Criticism Outlawed in US
Links for the day
Garmin Uses Linux for Some of the Garmin Products, Now It's Sued by Strava Using Software Patents
Software patents should never have been granted in the first place
Richard Stallman Will Give a Talk in Sweden in 6 Days
Dr. Stallman, despite his battle with cancer is still alive and mentally sharp
FSF Turns 40
We'll be focusing on patent-related topics this weekend
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Friday, October 03, 2025
IRC logs for Friday, October 03, 2025
Gemini Links 04/10/2025: Distro Hopping and "Part Time"
Links for the day